“The German position is absolutely strict,” Michael
Meister, the deputy caucus chairman of Merkel’s Christian
Democrats, said in a phone interview in Berlin today. “And
since such aid programs require unanimity, there’s not going to
be any change. All sorts of people can try to set things in
motion, but Germany won’t vote for it.”

It’s “obvious” that there can’t be unconditional help
from the European Stability Mechanism for Spanish banks, Meister
said. The responsibility and liability for the ESM lies with its
members, which are nation states, not banks, he said.

Spanish bond yields rose above 6 percent this month for the
first time since November on concern that banking losses will
swamp the government. S&P cut its rating on Spain by two levels
to BBB+ yesterday, three steps from junk status, citing concern
that the country will need to pour more money into its lenders.

There are no negotiations taking place to reopen the ESM
treaty to give banks direct access and there’s no working group
to prepare new instruments for the backstop, German Finance
Ministry spokesman Johannes Blankenheim said today at a regular
government press conference, responding to a newspaper article.

‘Bit Ambitious’

“Spain doesn’t only have a problem with its banks,” said
Meister. “Spain has a problem with its banks, it has a problem
with its budget and it has a problem with its economic
situation, with its competitiveness” too. “Thinking that Spain
will be on the safe side once the banking problem is solved is a
bit ambitious.”

Spain’s unemployment rate rose to 24.4 percent in the first
quarter, the highest in 18 years, the National Statistics
Institute in Madrid said today. The euro area’s fourth-largest
economy entered its second recession since 2009 amid the deepest
austerity efforts in more than three decades.

Spain is sticking to its line that austerity should be the
main driver of policy as it tries to quash concerns that it will
be pushed to follow Ireland, Portugal and Greece into a bailout.
European officials have not asked Spain to seek a bailout and
the country doesn’t need it, Economy Minister Luis de Guindos
said yesterday in an interview.

“I’m still confident that they can get by without external
help, despite the rating agencies,” said Meister. “Rating
agencies always catch up with the facts at some stage and
Spain’s three problems have been known for a long time.”

There will be more European downgrades in coming months,
Meister said.